>> here's a look at when's ahead on c-span2. next, "the communicators" with the digital editor of the economist on the evolution of social networks from ancient times to modern social media. then, a discussion from the aspen institute on small businesses and job creation. and later, a look at u.s./canada defense relations from the second in command with the canadian military. also today, connecticut's governor discusses education legislation passed this his state concerning teacher accountability, charter schools and changes to underperforming k-12 schools. governor malloy has called education the civil rights issue of our time, and he'll talk about his agenda at a forum of

the american enterprise institute beginning at 1:30 p.m. eastern here on c-span2. >> c-span, created by america's cable companies this 1979, brought to you as a public service by your television provider. >> host: and best selling author tom standage has a new book out, and it's called "writing on the wall." tom standage, what do cicero and twitter have in common? >> guest: well, the idea of the book is that social media is a very old idea. we think that it's recent and only people alive today have ever done it. but really what i'm arguing is there's a very long and rich tradition of social media that goes back to the era of cicero, so that's the first century b.c., and the point is that you don't need a digital network to do social media. if you have one, it goes faster,

but you could actually do it in the old days. cicero did it with papyrus rolls and ore members -- other members of the roman elites were linked to him and all spoke to each other, and it's very much a social environment. but there are many examples that occur throughout history, martin luther and his use of pamphlets, thomas paine and his pamphlet, "common sense," and the way they were used more broadly in the runup to the american and french revolutions. really what i'm arguing is when we use social media today, it's a reversion, actually, to the way media operated for centuries before us. >> host: you write that for wealthy romans, the distinction between letter writing and conversation was further blurred by the custom of dictating outgoing letters to scribes and having incoming letters read aloud to them. >> guest: indeed. so if you were someone like cicero or julius caesar, you would have a scribe. in fact, cicero -- sorry,

caesar, was famous for being able to dictate two letters at once. so you would be dictating, then you would also have a staff of messengers who would be carrying these messages to your friends, and when incoming messagers brought a scroll, your scribe would perhaps realize it out to you. romans were capable of reading and writing, but they had more done, they had higher bandwidth if they used scribes. in fact, the role played by scribes and messengers, both of whom were slaves, is akin to the role that broadband plays for us today. the reason we can do social media on the scale we can is it's cheap to copy. it was cheaper and faster than it had been before, and the romans were a relatively literate society, so they were able to have this ecosystem where they all passed messages to each other, sometimes several times a day, and it looks very familiar to people who use twitter and facebook today. >> host: what were the wax tablets that you talk about?

>> guest: yes. so the romans had these devices which look extraordinarily like modern ipads, and if you were sending a message within the city of rome, then rather than using a piece of papyrus, you might use a wax tablet which was reusable. it was a wooden frame, and it had wax in the middle, and you would scratch your message using a stylus, and then you would send this message by messenger across the city, and the recipient would write tear answer underneath, and it would be brought back to you. and cicero refers to this. it was sort of roman texting, and it was also used as a note pad, and people looked to write using these things. they're exactly the same size and shape as a modern ipad. there's even a one-inch-wide frame around the outside. and there was also an example of roman murals where people were depicted holding what looked like, frankly, smartphones. and because they're using these

very small wax tablets as notebooks, so it's one of these other unexpected connections between the way we do things today and the way the romans did it 2,000 years ago. >> host: and tom standage, you talk about the fact that the romans had their own lol. >> guest: they sure did. quite. they used abbreviations because they had, you know, not much space to write on these wax tablets or on a single piece of papyrus. and if you wanted to write a longer letter, you could glue several pieces of pack russ together. -- p papyrus together. there was a premium on space just as with a text message or a tweet. so they used abbreviations. one would be sgt, and it's sends greetings too. and then you could get on with the actual important part of the message. so it's very similar to the way we use, you know, abbreviations,

btw, lol, in tweets and texts today. >> host: martin luther. you write that luther had unwittingly revealed the power of a decentralized person-to-person media system whose participants took care of distribution. >> guest: so luther was very interesting. he is, obviously, 15 centuries after cicero. but initially what he does looks quite roman. so luther is a tee low january -- theologian, and he thinks that the catholic church has going to wrong on the doctrine of indulgences. the church is essentially selling these bits of paper that get you out of purgatory earlier than you otherwise have to after you die, and they're selling these things to fund construction of st. peter's basilica in rome. luther thinks this is fleecing the poor of their savings in order to build this great big testifying of a church. so he draws up a list of reasons why he disagrees with it, 95 of

them, in latin, and he says let's have a debate about this, here are the things i think we should debate. and he pins this to the door, and that's how the church door was the university notice board, and people would go, wow, this is hot stuff. so they'd start copying them down and sending them to their friends and discussing them and so far so roman, this is the sort of thing, it's manuscript transmission of latin text, but since the roman period, ambiguitien burg had in-- guttenberg had invented the printing press. wow, this is dynamite. they print a thousand copies each, and they're taken to other towns, and so the list of 95 reasons that -- things that luther wants to debate, they spread throughout the whole of germany within two weeks and whole of western europe within four weeks. luther is amazing by this. so is everybody else. but he senses an opportunity. he realizes that if he wants to take his message of reform to

the public, he can have his message distributed in this way without really having to do very much. so he follows up with a series of pamphlets written in germany rather than latin, and he writes in a straightforward german so people in different parts of the german-speaking lands with different dialects will still be able to understand him. no money changes hands, he just says here you go to the printer, they print a thousand copies. they go to nearby copy, the printers there go, oh, it's another one from luther, and so on and so on. and it ripples. and luther wages this campaign using pamphlets and preaching and other, you know, wood cuts and other things as well. but searchly, he's using the fact -- essentially, he's using the fact that the printers and the audience are amplifying his message because they're interested in what he has to say. they're recommending it to their friends. and if you have a message that people want to hear, want to recommend to their friends be, then you can get this kind of viral spread.

and we recognize that today on the internet. that was what martin luther took advantage of in the 1520s, and the result was the split in the church, the reformation. >> host: mr. standage, how does that differ, what martin luther was doing, from mass media? >> guest: well, the difference is when you have a social media system whether it's today on the internet or in the old days using pamphlets or papyrus, it's a two-way, conversational environment in which people are passing stuff directly to from their friends, so you're exchanging information along social networks, and that's why we call it social networking and social media, and this creates a distributed discussion or community. that's what a social environment looks like, and we're familiar with that on facebook and twitter where we basically see stuff from people we've followed. the difference with mass media is that mass media is one way x it's impersonal, and it's basically top-down broadcast.

so the radio, for example, sits in the corner of the room. it's not social, it's just sitting there, you're not having a conversation with it, and there is no personal recommendation involved. and so we have come to think of these one-way mass media channels, which can reach a very large audience very efficiently -- so newspapers, radio, tv -- we've come to think of them as old media, as the way media always was, and the rise of the internet and social media is unprecedented and now, you know, we can get news from our friends, and you don't need to be a newspaper editor or the head of a tv channel to decide what message is going to spread. but actually this is how things worked in the era before mass media. it really only gets going in the second half of the 19th century, so after the 1850s, and we've come to see that period as the way media always was. but if you look before that, the period before old media, what i call the period of really old media, then actually it looks very, very familiar. it's social.

it's social right the way from the romans all the way up to the french revolution, the american revolution. and it's only after that that we get mass media. so the thesis of the book is that social media is a reversion to the way things used to be and, therefore, we can learn from the old social media systems that came before. it turns out of the questions we have about social media today -- its impact on the quality of public discourse, whether it's a waste of time, can it start revolutions -- these are all modern questions, but they all arose in the past from previous versions of social media as well, and that means there are lessons we can learn today by looking at history. >> host: and, in fact, you write in your chapter let truth and falsehood grapple, you talk about the year 1579 in england trying to restrict some of these systems. >> guest: exactly. so it's a timeless problem. today we understand that, you know, when an embarrassing video or something like that gets out on the internet and people try and take it down, you really can't do it. with a distributed media

environment where there's no center, there's just lots of interbe connected things. -- interconnected things. it's very, very hard to control. and we see this after luther, after he's caused this amazing split in the church with extraordinary ramifications for politics and religion in europe. rulers across europe think, oh, dear, this printing press is bad news. we need to find a way to control this, so they start imposing these controls on the press. they say you can't own a printing press unless you have a license from the government, all documents have to be checked before they can be printed. but with almost immediately this system fails to work. there are ways of getting round the licensing requirements. you can do things like when you're given a license to print be something, you know, up to say under license on -- you can just write under license on a document anyway. you can list a completely different printer from the one who actually printed it or maybe make one up. you can print under a pseudonym,

and it's very hard for the authorities to figure out who has printed this document and to go and punish them. so you get this fight between the decentralized nature of the media environment and the desire to centralize and control it by governments which we recognize as a phenomenon be of the internet era, but it's actually going on in the 1500s. >> host: tom standage is a best selling author of a history of the world and six glasses and an edible history of humanity are his two latest books, besides writing on the wall which we're talking about now. what's your day job, mr. standage? >> guest: i'm the digital editor at "the economist," so it's my job to work out how we should best be using digital platforms, and part of that is what led to my interest in historical social media. because, essentially, we are returning to the way that things used to work, and "the economist" came out of sort of a culture of coffee sops and clubs -- shops and clubs and

discussion. so i think there's a lot we can learn from modern news organizations today by looking at history about how we should deal with the changes that are taking place in the media environment today. >> host: how did can thomas paine contribute via social media to the american revolution? >> guest: well, tom paine took advantage of a social media environment that had mostly been constructed by ben franklin. he was sort of the mark zuckerberg of the 18th century because he constructed a platform for social discourse. he was a newspaper publisher among many other things, of course, and he was also one of his many jobs was to be deputy postmaster general for the american colonies. so he greatly improved the frequency and efficiently of the postal service. that was the first thing. and the second thing he did was institute a rule that newspaper publishers, such as himself, could use the postal service for free to deliver to their customers and exchange newspapers weed to haves in

other -- weed to haves in other -- with editors in other towns. they typically had a small scale, 500-1,000 copies at most. it's mostly letters from subscribers or speeches or reports of, you know, funny happenings or stuff copied out of other newspapers. there aren't professional journalists who are writing reports. that all comes much, much later in the era of mass media. so this is a local platform. and what ben franklin does by allowing newspapers to exchange copies with each other freely is he built a system -- he doesn't realize he's doing this. this is the system that tom paine and others are able to use in the runup to the american revolution, just spread the idea that america should become independent from great britain. and, obviously, he writes "common sense," and it's distributed as a pamphlet, and it's passed from person to person and recommended and copied just like happened with luther's pamphlets, but it's also printed and excerpted in

the newspapers, and those newspapers spread to oh towns, and people learn across this whole media environment about what tom paine has to say. many papers actually printed "common sense" in full, so it was able to ripple throughout the entire colonies and become extremely widely known very, very quickly. so ben franklin kind of prepared the ground for it, and tom paine and other writer in the revolutionary period were able to use this system to spread the idea that independence was the way forward for america and, of course, that's what came to pass. >> host: let's move forward in history a little bit and talk about the 1900s, 1920s, googly elmo, mar coney and the rise of amateur radio. >> guest: the interesting thing about radio it, too, was a social immediate medium. if you look right at the beginning of the 20th century, there were enthusiasts who built radio set, and it was both a transmitter and a receiver. it couldn't do audio, so you

just had to do morse code, but this was promoment inside the same way as teaching your kids to program today, building robots, that kind of stuff which i like to do with my kids. we think these are the sorts of skills that will be useful. radio was promoted as a way to improve your child because marconi had made his fortune tinkering in his parents' attic. he'd invented this technology. so if you wanted to ride the radio, the way was to get your son a radio set, and he would learn morse or code and communicate with other people. it was all great fun and very social. the problem was as more and her people kid it and as transmitters got more powerful, the fact this they were operating essentially on the same frequency was a problem. the navy kept being interrupted by boys who were playing tricks on them saying there's a sinking ship over here, and companies wanted to use it as well, they wanted to be able to do broadcasting. so what happens after the first world war is that radio goes from being a social medium to --

a two-way medium to being a tightly-controlled, regulated, one-way broadcast medium. and this is interesting because it's quite familiar looking and social to start with. you've got this sort of online chat room that everyone's in within a particular city with their morse code transmitters and receivers, and then it goes to being absolutely opposite of that, to being a one-way broadcast channel. this is not social at all. so radio is the interesting pivot in this whole switchover from social to mass media, and now we're pithing back again from finish pivoting back again into a more social media environment. >> host: and, in fact, you write that the titanic led to one of the first regulations of the airwaves. why? >> guest: yes. well, this was because, this was a growing problem, the idea that boys who were enthusiasts, and they'd often built quite powerful transmitters -- and all of this was unregulated -- were starting to cause problems with

things like rescuing people from sinking ships. and, in fact, it wasn't true that the use of the amateur radio hampered the rescue effort, but it was a very convenient story for the white star line immediately after the disaster, because when the titanic went down and the transmissions were underway, the it's a bit like when there's a sort of breaking news on twitter, like, you know, when osama bin laden was killed and everyone goes nuts on twitter. it was the same. the whole of the east coast lit up with radio transmitters saying have you heard what's going on, and there was a american amount of misinformation being passed around. it didn't actually, in the end, hamper the rescue effort because that was flawed for other reasons. but it was very convenient for the owners of the titanic to say it all would have been fine if it hadn't been for the ham radio guys. so in the first few days after they used it as an excuse. and that's the point at which

radio ceases to be such a social medium. so the titanic is really involved in that switchover. >> host: something our viewers may find be familiar, rca in the 1920s had the tag line worldwide wireless. >> guest: that's right. www was their logo. originally, rca was going to be a communications company. it was going to provide transatlantic deleg my services because up to that point telegraph messages, telegrams, were sent using wires. and radio meant you no longer had to build this incredibly expensive network of wires, in theory, you could have just a few towers and so on. so rca was set up to capitalize on that. marconi was making great progress, and there was real concern that the british were going to end up as a monopoly. it then pivots to this entertainment broadcast model in the '20s and, again, a very

familiar debate which is how do you pay for this? initially, rca is selling radios and using the lure of free broadcast services, free content to get people to buy the hardware. but once everyone's bought the hardware, you're in a replacement cycle, and it's a much less lucrative market. so seem start to wonder how thai going to do -- they're going to do this, are you going to have a tax on every model? you have to have a license to use the radio and pay it to the government, and the government runs the government broadcast, the bbc. in america that didn't go down terribly well, so advertising was proposed. there was enormous opposition. oh, no, you're going to clog up radio, we're going to have to listen to ads. it's just like how people reacting to advertising on the internet or advertising on twitter, instagram, this is terrible. this is exactly what happened with radio and, of course, advertising did come in, and it turned out to be the way you sustain that model. so every soap operas and all the

other sorts of things. but it's a very familiar debate for those of us who use the internet today. >> host: october 29, 1969, bob taylor, charlie klein and re hard kleinrock. what happened? >> guest: this is turning on the internet. they didn't realize it at the time, but they were establishing the first link in what grew to become the modern internet. and this was an experimental network at the time, and it didn't work. it crashed after two letters. so they were trying to type log-in. i think they were trying to connect ucla to stanford. they were trying to log in over this network link they'd built, and they typed l, and it worked, o, it worked, as soon as they pressed g, the whole thing crashed. so the first attempt to do an internet link actually didn't work, but subsequently, they got it to work. the internet starts off as this very small network, and it was essentially built to link together the various computers being used for military research

purposes, and the guys who were funding this had many of these computers that they had helped to set up and were being used. they wanted to be able to sell what was going on on them all, and they didn't want to have to have a remote terminal to every single machine around the country. they wanted a single terminal that could see all of them, and they also saw -- again, this is an interesting thing that seems to happen when you have people who have computers -- users of a particular mainframe would be able to send messages to each other, and you'd get more collaboration because they could share their work. the idea was if you connected lots of computers together, you'd get more collaboration. of course, we've seen that on a massive scale, that the internet has fostered collaboration of all sorts not just between military researchers, but also between people of different fields. and this is what makes the internet so, i think, powerful as a means of stimulating information and collaboration. it allows people and ideas that previously wouldn't have been

able to come into contact with each other to meet. and, again, there's a historical parallel to this. that's exactly what coffeehouses did in the 1600s. they had this rule anyone could go in as long as they bought a dish of coffee which was a penny, and if you went into a coffeehouse, you were expected to be able to talk to anyone, regardless of social class. and this was a big deal in england in the 1670s or so. but it means that you get these environments where as one contemporary observer put it, gentleman, lord, mechanic and scoundrel all shall mix. so you get people and ideas colliding that hadn't previously collided with each other. and this is, you know, denounced by some people because it's such an alluring environment. you never know who you're going to meet. people end up spending hours in the coffee shop. of but it turns out to be extremely fertile as a sort of hotbed of intellectual innovation. you get the scientists of the rainbow coffee house set up the royal society, and isaac newton

writes his great work in order to settle a coffeehouse argument about the nature of gravity. lloyd's turned into lloyd's of london, the first insurance market. jonathan's coffeehouse turns into the london stock exchange. so coffeehouses turned out to be in the great place where you mix people and ideas up, and tsa what the internet does by allowing people of different places to meet virtually and to exchange ideas. >> host: tom standage, when you look back to 1969, that first internet message to today, the growth and the change in what we know as the internet, is it faster than in the past? >> guest: yes. it's definitely faster. so i have to, you know, be straightforward about this. modern social media is, obviously, operates on a scale and at a speed that is unprecedented in history. so it's global, it's instant, it's searchable, it may be permanent. we don't know how permanent which it is, that's sort of our open question at the moment. so that is definitely

unprecedented. but the idea that social media environments have never occurred before is not unprecedented. they have existed for many centuries, and even though there are these differences, the analogy is close enough that it's extremely informative. the sort of social reactions that you get to social media throughout the centuries -- that it's a waste of time, that it will lead to revolutions, things like that, are exactly the sorts of issues that the internet and social media today have also raised. so the analogy isn't perfect, and there are obviously things that you couldn't do with papyrus or wax tablets or pamphlets, but the similarities are close enough that we can learn an awful lot of lessons by looking at history. >> host: mr. standage, you write another possibility is that today's social platforms represent a transitional stage like aol and compuserve in the 1990s. >> guest: yeah. there's something quite striking about the way social media is operating on the internet today. if you look at e-mail, they're based on distributed, open

standard. so if you don't like the idea google is looking after your mail, you can set up your own web server. it is at least theoretically possible. you can set up your own web server that runs the open standards of the internet and plug it into the internet, and it will just work. similarly, if you don't want some company like word press to host your blog or whatever you're publishing on the internet, you can set up your own web server, plug it into the internet, and it will work. this is based on open standards. social media is done in a centralized, siloed way, and it's owned by large companies like facebook and twit err. this is very different -- twitter. it's not open standard space and distributed. so i wonder whether that's a permanent state of affairs. this is, of course, just what happened with aol and compuserve in the 1990s. it looked as though they owned access to the consumer internet, and in fact, what ended up happening was people just bought straight vanilla access, dial-up access, broadband access to the internet itself and went on the

web and used open standards. they didn't need these probe pry tear client software -- proprietary client software, so i wonder whether facebook and twitter are the aol and compuserve in this story. now that said, it's actually quite a difficult computer science challenge to build a distributed social system that works in a timely manner. and we know this because it used to exist. net news, if anyone was using the internet in the 1990s, they'll remember that. and, essentially, it was a social media discussion system that was based on open standards. but it was rather slow, and it quickly became rather unwieldily. the volume of traffic passing through it was really too big, and a lot of isps didn't want to get involved with it. there's clearly a lot of technical challenges that would need to be overcome for this to happen. but i'm keeping a very close eye on efforts like dias pa -- diaspora. there seems to be a new one every few months to create an

open standard for social networking. the same could happen to to facebook and twitter in the next decade. >> host: but whatever form social media takes in the future, you write, one thing is clear, it is not going away as this book has argued. social media is not new. it has been around for centuries. today blogs are the new pamphlets, microblogs and online social networks are the new coffeehouses. media sharing sites are the new common place books, they are all shared social platformed that enable ideas to travel from one person to another, rippling through networks of people connected by social bonds rather than having to squeeze through the privileged bottleneck of broadcast media. that said, mr. standage, social media as you ask in here has it coarsened and trivialized public discourse? what's your answer to that? >> guest: well, one man's

trivialization is another man's democratization. so every time it's easier to publish stuff more easily -- this happened with the printing press and with literacy, to be honest. before the alphabet, writing systems were very complicated and hard to learn. every time there's a way for more people to publish, then the people who used to be in charge always complain that the wrong people will use this to say the wrong things. and so eras husband, a contemporary of luther's, says this. he's very worried because everyone is reading these pamphlets that luther is writing. they're very short, easy to read because they're in german. no one's reading the greek and roman authors, he thinks this is terrible, a terrible coarsening of the intellectual debate. we get it with twitter now that people say, oh, it's terrible that thin can say just anything. but i think this is good. i think it's broadening access of publishing to more and more people, and it's democratizing

access to publishing. now, clearly what happens each time you have one of these expansions is that it initially appears to be completely unmanageable, and it takes some time to work out the mechanisms for sifting the stuff you really want to see from the stuff you don't. the printing press made it much easier to publish books and there was an explosion of publishing. people felt overwhelmed. there were complaints of information overload in the 1500s because of this. in the centuries after that, people came up with tools for dealing with it. things like book reviews, tables of contents, indexes in the backs of books. what all of those things do is enable you to work out which books might be relevant to you and which bit of a particular book is the bit you're looking for. so those were invented in order to make books more easy to navigate. we're going through the same ross with the internet now. -- process with the internet now. initially we had yahoo!, then we had search engines, now we're using social to filter the

stuff. we're getting our friends to recommend the interesting bits to us. in fact, it's just the way the romans did it, they relied on their friends to tell them the news, but they were parceling the relevant bits. so you could filter everything through your friends and then filtering stuff for them is where we're going next. we're going to see hybrids between search and social that are already starting to emerge. so this is how we are dealing with the fact that lots and and lots of stuff are being published, and we don't want to read all of it. that's what i'm expecting to happen. the good thing, of course, is what i regard is as thal will be different from what you or anyone else regards as the signals. and it will allow us to pluck from this enormous, churning ecosystem. >> host: tom standage, "writing on the wall is the book," thank you for being with us. this is "the communicators" on c-span. >> guest: thank you. >> c-span, created by america's cable companies in 1979, brought

to you as a public service by your television provider. >> coming up next, a look at thigh coenterprises -- microenterprises and how they can spur job creation. then a canadian journal looks at nato, border security and the u.s. role in the asia-pacific region. and later connecticut governor daniel ma a low talks about his -- malloy talks about his education agenda and the challenges he faces in the state's achievement gap. >> today, the leader of the french opposition party talks about france's role within europe and the rest of the international community. he'll discuss a range of issues including the eurozone crisis and his country's refusal to sign off on the recent iranian nuclear deal. we'll have live coverage of his remarks beginning at 6:30 p.m. eastern here on c-span2.

>> on august 9, 1974, vice president ford was sworn b in as president of the united states. this was the dress that mrs. ford was wearing at the swearing-in ceremony in the east room of the white house. she was less than excited about becoming first lady, but president ford encouraged her saying we can to this. she resolved that if i'm going to have to do this, i'm going to have fun doing it. and the fun for her started almost immediately, within ten days she had a state dinner to entertain king hussein of jordan. and it was something that she had to prepare for as her role as first lady, and she hit the ground running. >> first lady betty ford tonight at 9 eastern live on c-span and c-span3, also on c-span radio and c-span.org. >> next, hydroenterprises -- microenterprises and how they

can spur job creation, businesses with five or fewer employees that start with a small amount of capital. a panel examined how they can allow people in small communities to be economically empowered. the aspen institute hosted this 90-minute forum. >> to this afternoon's event. this which we'll be discussing microenterprise as a job creation strategy. at the economic opportunities program, we are really focused on the challenges that low to moderate income americans face today in trying to earn a livelihood in today's economy. of we work with a variety of local initiatives and institutions that are developing new strategies, that are sport supporting the economically vulnerable and trying to promote their economic success. and as part of this work, we've been hosting a series of conversations that bring together diverse perspectives from policy, academia, business, education and other spheres to discuss the challenge that low

income americans face today and and to think about new ideas that can address these challenges and help move us forward. today's conversation focuses on the potential of microenterprise to address the jobs that fit in today's economy and draws on research and policy analysis developed as part of the big ideas for jobs series that is supported by the casey foundation and the kellogg foundation. and we're particularly grateful to the casey foundation for their support of today's event, and i want to acknowledge bob and -- [inaudible] who are here with us today. and to start us off, i am delighted to introduce don graves who has flee jobs -- three jobs, so i'll try to get all three titles right. deputy assistant secretary for small business development and housing, and he's also the executive director for the president's council on jobs and competitiveness, and in his free

time he gets to go to detroit where he's leading the government's investment in detroit and working with city, state, business, nonprofit and community stakeholders. so he's a busy guy, and you have more information about him and all our speakers in your packets. so i won't belabor my introductions. i am delighted to welcome don to the podium and please join me in welcoming don. [applause] >> well, thank you so much, maureen. thank you, aspen, for inviting me. it's absolutely a pleasure to be here to join this panel and talk about something that is critically important for the country. the president believes that we need to focus full force on ways that we can make sure that all people if our communities have the opportunity -- in our communities have the opportunity to succeed, particularly those who are the most vulnerable; the

very low income prison departments of our -- residents of our communities. one of the things that i do this my job both at treasury and at the white house is try and find ways that we can support a whole range of folks as they create jobs, as they help to grow the economy, as they help to make this country more competitive. and the work that the aspen institute has done, field has done at the aspen institute so important because it's helping to show that there are mechanisms that we can support microenterprises as they grow. as connie says to we all the time -- you'll hear from her in a little bit -- one in three is the tag line that she talks about. so if we had, if one this three -- and i'm going to mangle this, connie -- but one in three, if one out of every three microenterprises in this country

employed one additional person, we'd be at full employment. so i think it dose to say that -- it goes to say that it's really important for us as a nation and particularly those of us who work on policy to think about ways that we can support growth of microenterprises because that will help us get to a place where we as a country are more competitive, and we can get our communities more stable and growing. as you all know, the president has spent a lot of time focusing on ways to support small businesses. he's passed a lot of legislation with the help of congress, he's implemented new programs, and it's because we recognize that microbusinesses basically account for 26 million u.s. jobs. that's not a small figure. and with large employers in recent years hiring less so than many of us would like, it's all the more important that the

self-employed and independent work take a more leading role in our economy. so there's a range of things that the president and the administration have done to support small businesses and microbusinesses in particular, both with direct support through loans and investments and through a range of rams across -- programmings across the administration, but also indirect ways that we sprt microenterprises through regulatory improvements, through supporting mechanisms like grant programs across the government that support local and regional efforts to grow microenterprises. in fact, some of the things that you may not have heard about include a one-stop shop. we've known all along, those of us who have worked with small businesses, have known that it's very difficult if you are an entrepreneur who wants to find out what resources there are at the government, well, you can go to one of two, three hundred

different web sites and get that information, or you can call around, and maybe you'll get the information that you're looking for. the president heard that loud and clear and said we need a one-stop shop for businesses. for an entrepreneur who wants to get a certain piece of information or learn about the range of support mechanisms. that's why the president created business.u.s..gov. it's that one-stop shop. it provides information in a way that business owners can use it rather than wasting time going to thousands of different links on a web site. similarly, the president as sought to streamline regulations that are hampering small businesses. we know that this is an issue for businesses at the local level and at the state level. well, it was also a problem at the federal level. so the president signed several executive, took executive action

to reduce the amount of regulatory burdens on small businesses and asked all of the agencies to rook at those regula -- to look at those regulatory rules that were in place that were hampering businesses from being able to succeed. so the agencies went back, looked at all the rules on their books and found in cases that they could either waive or they could tweak their rules so as to make it easier for businesses to engage in the work that they need to do creating products, providing services and not having to get hampered in red tape. so that's just one of many different things that we've been doing to help small businesses. at treasury we spend a lot of time thinking about access to credit. we know that access to credit is a huge issue for microenterprises, for small businesses in all, but microbusinesses in particular. of -- that's why the president

signed into law the small business jobs act of 2010. there are a whole range of components of the program that, you know, sba has implemented, that the u, da has implemented -- usda has impresented. at treasury we have three different pieces of that legislation. one was a small business lending fund. this was a program that invested $4 billion in community banks. these are the banks that do the lion's share or an outsized portion of the share of the lending to small and microbusinesses. because of that $4 billion investment in 332 institutions across the country, community banks and cdfi loan funds or community development loan funds, we are seeing positive returns for the taxpayer. so this is at no cost to the taxpayer, and we're also seeing that lending has increased by more than $10 billion. so you take that $4 billion investment, as a result the institutions have invested --

have loaned more than $10 million above and beyond the lending that they were doing beforehand. but that actually turns into around 41,000 new loans to small businesses. it also means that of those loans i think we're somewhere around 65-70% of those loans were below $100,000. so these are actually loans that are going to be smallest of the small businesses, not mid-sized businesses, but actually getting to the businesses that are going to be the job creators and are the job creators. and we also invested through the state small business credit initiative. a billion and a half dollars went to states to support their innovative lending and investment programs all across the country. that billion and a half dollars we expect will lead to $15 billion worth of new lending across the country. to date, it's supported around

5,000 new loans, and 80% of those loans through the ssbci program went to businesses with 0-10 employees. so, again, these are affecting the small best businesses in the country -- smallest businesses in the country. the program supports a range of -- this program supports a range of state programs, i think there are about 142 different programs across the country, but it's really the most innovative and the most successful programs that it's supporting; capital access programs, collateral support programs, loan participation programs, a range of microenterprise programs. in fact, as maureen mentioned, i spend a lot of time in detroit. just two weeks ago the state of michigan, using this ssbci funding, launched a new microenterprise program with huntington bank. it's a $25 million microenterprise program focused on detroit. ..

who are working closely with microenterprises. so i'm not going to spend more time touting all the things that we've done. no doubt many of you know these programs yourself. i will say that what i'm most

excited about is some of things we been working on recently. so start of america's something the president helped to launch a few years ago, which is mobilizing ileus of dollars of business resources to help launch hundreds of thousands of startups all across the country. we know there are local startups all across, collaboratives that are part of start up america partnership all across the country. just i think just about a year and half ago the president signed into law something that he's been going for a while which is a jobs act or jumpstart our business start ups back. one provision of that we think is a game changer in the democratization of capital for small businesses. that's a crowd funding. many of you know about crowd sourcing. many of you have likely heard about crowd funding. what was it, three weeks ago that sec actually put out its

proposed rules on crowd funding. if you've not taken the time to look at the crowd funding rules, i encourage you to do so. give the sec your comments. i think the comment period closes the middle part of february. crowd funding has the ability to get support from a crowd from friends, neighbors, folks in the community to help microenterprises take their great idea and hire an additional person, to get the type of investments that they i think had once believed was only eligible for folks who live and work in wall street or in boston or silicon valley. now we can go out to the heart of the country and find ways to help support small enterprises with folks who live in their community. folks who believe in those small businesses, but prior to this didn't have a way of investing in those diseases.

so all of that is to say that we are very focused on what we can do to support microenterprises in this country. we think it is critically important to help grow more businesses, helped to employ more people so we can get the country to a place where we are all realizing the dream that each of us as. so with that, i want to again thank asking for hosting this event. i think -- i think the panel will be really interesting and i look forward to hearing from you and working with you, and meeting you all at some point. thank you so much. [applause] >> and well, thank you, don. so much. and i think i was right, he's a busy guy, right? i would want to thank don begin for his leadership and his energy and all he is doing to really promote microenterprise and build the field and build opportunities are americans to create jobs. so let's thank don again.

[applause] >> and now it's my pleasure to quickly introduce our panel. have a really terrific panel for you again. we do have materials for you so i'm just going to try to quickly help you match names and faces in case you don't know everybody. next to me is my colleague joyce klein, who is our director of the field program at the aspen institute, and she will be moderating our panel today. and to her right, your left, if i'm getting this correct, is elaine edgcomb who was the leader in the field for many years and is now our advisor and where happy to have you back with us today. next we have ida rademacher. were happy to have her back with us today. she is chief program officer for economic development. next, elizabeth kregor, director

and clinic on entrepreneurship and lecturer on law at the university of chicago. and next we have connie evans who is the president and ceo of the association for enterprise opportunity. and last but certainly not least we have christiana mcfarland. so thank you all so much for being with us here today. and i'm going to turn it over to joyce to get the conversation started. >> thank you, maureen. i would like to welcome everyone again. i work within economic opportunities program and i run the field program which focuses specifically on microenterprise development in the united states am excited to be here for our conversation today and to be speaking with our panelists who bring a really deep and rich set of information and experiences to the conversation. i also want to acknowledge that we timed is really well because saturday is november 30, small business saturday. so you can think less about black friday.

you should go out and spend your money but also remember you should go spend your money at small businesses on saturday at will. our goal is to touch on three issues today. why, what and how. so the first thing we want to talk about is why. so if in the united states we are concerned about creating jobs and particularly we're concerned about creating jobs for low-income individuals and communities that have a great -- greatest challenges in connection to our economy, why is it we want to focus on microenterprise development. that's the why. second we want to talk but what it is we can do to better support microenterprise development. and maureen mentioned we are building off three papers that were offered as part of the job series created by the casey foundation, what they really wanted to do as we look at the job creation challenge facing our country was to look at policy ideas that were both feasible and scalable. so that's what we're about today, what are the feasible and

scalable policy ideas that might be was to support microenterprise development in our country. finally, the how. we also wanted to get into not only what were those policy ideas but how can we move forward in terms of advancing those ideas. some of these ideas are not that new. they been around for a while but the question is how do we get them in wider play and scale them up here in the united states? those are the three things we want to talk about. it's a lot to cover. we have a big panel because we wanted to the authors of the paper but also folks who could engage in a conversation with us. as opposed to make a lot of opening remarks a lot of opening remarks i'm going to do one definition and a couple of quick logistics and jumped right in. i got it would be useful to start with a definition of microenterprise development for those of you who are not that familiar with the. i think this is a pretty widely accepted definition. we define it as businesses with five or fewer employees --

including the owner. and typically businesses that require 50,000 or less in financing. so if you think about how we define small businesses in the u.s. and if you look at the website you realize it is to find a different ways depending on which sector. they may have as many as 500 or 1000 employees and for many of them were talking small business carefully business that is 35 or $50 million in revenue. what we're talking about for michael business in u.s. is the smallest, zero to five employers. often what folks are targeting are really very small informal businesses that may require just a few hundred dollars in financing. while some of those businesses like that any euros that we are focusing on here as well, we are talking of businesses that can employ several people. and really reform a full-time

businesses for folks. in terms of logistics our format is going to be i'm going to first post a going to first poses that question solar panels to try to get some ideas out on the table. because with a big group on going to be crisp so we can keep the conversation going. then would want to do is leave time to have questions from those of you who were in the audience. for those of you who are on social media, our total -- our twitter handle is -- i know have some folks joining us by live stream and also c-span just so folks are watching us virtually want to tweak question would try to follow that and maybe q. thostothose up in the q&a but ik those of you who are with us today in person, feel free to tweak but please turn your phones to silent. so with that we're going to jump right into the conversation. i'm going to start with elaine. we at the offending research for

about two decades, and focusing specifically on the network of community-based organizations that work to support low and moderate income. can you start by paying a picture for us of what these micro-businesses look like based on your research and what the organizations that work with them are like? >> sure, choice. thanks for asking that question. i think the definition that joyce put out right at the top was really helpful one to think about it quantitatively. when you think about what these businesses really are, i like to think about them as businesses that make our communities livable and in many ways delightful. without those businesses we don't have livable communities or delightful communities. they are street vendors and shopkeepers, tailors, bookkeepers, the people who clean our houses and our offices. they are daycare providers. they are the people who make crass and artisan products that we like to buy. they are the people who take

food and transform it into wonderful specialty foods. they are our restaurant owners to all of those kinds of people that make our communities livable and delightful. and across the u.s. there's over 800 nonprofit institutions that are providing services to entrepreneurs like that to help them start and grow their businesses. those institutions vary in form. some of them to microenterprise the government as this whole thing 50. others do that as part of a set of other services they offer. community government financial institutions, educational institutions, community-based organizations, and they all provide services that entrepreneurs need. about 45% of them provide loans, capital access. the other 55 or so lead with training and technical assistance services for those entrepreneurs. they will serve a wide variety of those entrepreneurs that i just described but in particular the focus on those that are

disadvantaged, that have fewer mechanisms for accessing capital or business services. they reach out to those who are largely women, i think the last u.s. microenterprise census indicated that 58% were women. they are largely minority. they are low income, i think about 75% were low to moderate income and over 45% were actually working for. folks whose household incomes were at 150% or below the federal poverty guidelines. so those are the kinds of people we're talking about today. >> thank you. the research picture -- wonder what to do is turn to beth dickey work in the law clinic that worked with low income entrepreneur is so we'll get to your policy recommendations in the second because you bump up against the issues all the time but i want to start by kind of describing for us one of the entrepreneurs who you've worked with in your clinic, and maybe

give us a flavor of some of the challenges you've worked with them on. >> absolutely. as choice mentioned, i'm the director of a legal clinic that provides legal assistance and advocacy for low-income entrepreneurs. and as was mentioned, some of these big ideas are not new, and our big idea is as old as the country. it is that each american has a fundamental right to dream a big dream and start a small business. one of the many entrepreneurs i met over the years i've been working in the clinic is manny hernandez. and he is someone who worked in some of the best restaurants in town, but as the economy started to turn down, he lost his job. instead of lamenting, he took it as an opportunity to start his own business, create his own job for himself and for more people.

so in chicago, unfortunately, it's illegal to sell food from a food cart. so unless you're selling ice cream. so the most affordable way for him to start a business, the most affordable way for him to test the market and get out into some of the local neighborhoods with his culinary creations was foreclosed to him. he did start a food truck called the tamale spaceship. he and his cofounders loved it that they grew up with, so they serve excellent tamales wearing wrestling mexican mass. really fun. a certain make the neighborhood delightful. he went from unemployed to being an employer of five. i guess that just tweets amount of the definition of a microenterprise because with himself there were six. he had created these jobs, but, unfortunately, the city of chicago says that a food truck

cannot be within 200 feet of a restaurant. and you can't be downtown or in any of the neighborhoods where there's a lot of foot traffic. if you're more than 200 feet from any restaurant. so this was a serious challenge and burden for the tamale spaceship and all of the other through trucks in the city. when efforts were made to explain to the city how important the opportunity to start a food truck was to the beginning entrepreneurs, the city did write some new laws but, unfortunately, the actually tightened the screws on the food truck. the fees for parking closer russia went from 250, $500, to 1000, to $2000, four times the fees for an actual health violation. so this anticompetitive law that was in place only protected the

restaurants and made life extremely difficult for entrepreneurs like many who are starting to baby businesses and hoping to grow their businesses in the next years our next decades restaurant. spirit that gives us a flavor for what we're talking about. i'm going to turn economy because one of the issues that comes up i think for those for folks like you who are the voice of michael this is a microenterprise programs in the u.s. when you talk to policymakers, this question of whether, how valid a strategy is this? how big is this as a sector in our country, and is it really worth focusing on these tiny businesses? you just did some research which looked at the issue of how micro-businesses create the overall economy. can you give us the highlights from that works because yes, thank you, choice. speaking of big, the report is called bigger than you think. the economic impact of micro-business in the u.s., and

that study funded by the kellogg foundation points to the enormous impact that is made by micro-businesses. first, 92% of all businesses in this country are micro. 98% of all african-american owned businesses are micro. and nearly 96% of all hispanic businesses in this country are micro. and so we are talking about the majority of businesses in this country. overall, in the aggregate, these businesses create or help to create more than 41 million jobs. again, that directly, indirectly, and the induced job effects from micro-businesses. 41 million jobs, which is nearly 30%, or 31% of all the job creation in this country. and so we think it's very

important to bring the data that, the contribution, the outside contribution made by micro-businesses really, as your example shows, can become an economic lifeline for individuals in their committee. for women we found in the data that women who are using micro-business as a strategy, are able on average to generate between eight and $13,000 more income than those who are not in a micro-business. we found also that it has a particular satisfying and productive effect on wealth creation. for example, micro business owners are 2.5 times, have 2.5 times more wealth than non-business owners. for a latino, man, the

difference is five times. and for an african-american woman, the differences african-american woman, the differences noted at this is, a micro-business in particular, is 10 times the wealth creation than otherwise. and so we think these attacks really do become -- affects -- for individuals and communities who are underserved. we talk about underserved because of their lack of starting wealth of products and services that are needed to fit their particular and unique set of circumstances and help their businesses to start and grow either are not available or they are just not acceptable. so we think there's a great opportunity looking at this data in the aggregate to really change policies, not only policies but to change the idea and our imagination of what we think about when we think of businesses in the committee.

that they really are micro. spent thank you. and thank you, i like the fact that you include the wealth question of what the. obviously, in the short term and what we're focusing on today, our country is a jobs issue but we have a very long-term issue with growing inequality in terms of wealth creation. 's understanding the wealth effects of these businesses is important as well so thank you for raising the. elaine, i want to come back to you. time he started to reference the role come in jamaica as will the role that microenterprise developer organizations play in supporting particularly the most disadvantaged and the folks of the hardest time accessing resources. some of your most recent research, and, in fact, the study that the casey foundation funded looked specifically at the job creation affects of micro-enterprises. so give us some sense of what you learned through that research. >> sure. so what we did was we worked with 23 microenterprise development programs across the

country. together with him collected survey data on close to 1200 entrepreneur clients of those programs who were randomly selected from all of the clients that they serve in 2009. we looked at their experience in 2010 and we collected the data in 2011. what we learned was that these disadvantaged entrepreneurs were indeed able to create jobs, not only for themselves but for others in their community. we looked at an array of data points. so, for example, we found that in under about two years, about a year and seven months, the number of jobs supported by these entrepreneurs increased 104%. we found that the owners, two-thirds of them, were working full-time at their businesses. the employees, a third of them were working full-time.

the wages they were being paid exceeded the federal minimum wage. for owners that exceed the federal minimum wage by about 53%. for workers it exceeded it by 38%. we also found that for owners who were below the poverty line when it entered the program, 80% were above the poverty line when they were surveyed due in part to the income that was generated from those enterprises. we even found that the report people were able to create businesses that employed other people. 36% of the people who came into the program below the poverty line not only create a basis for themselves but generated employment or other people in their community. there were 1.4 jobs for other folks for business among the very low income in the study. the other thing we learned, it costs between 52 and $5500 to support the creation of one of these jobs.

it's a very reasonable about of money. and we learned that for every dollar invested in the program, $3 were generated in wages paid either to workers or to the owners themselves and that was within the space of about a year and a half. if we project that out you can see that investment would multiply even much further. so those are the kinds of data we were able to find out from these quantitative surveys. we were able to cure inside the employees household or look at how the employee considered the quality of the job, to what extent it provides a career ladder or opportunity for future development. but coming soon will be able to do that. staff will be interviewing a set of employees of business owners supported by -- in new york, and once those interviews are done

hopefully we will be able to speak can't just have these employees think about these jobs and what is the role they played within their household. so the quantitative picture looks great and we're looking forward to the qualitative picture as well. >> hopefully that gives folks a picture of what we're talking but in terms of the jobs created by microenterprise. we will turn out to the policy question. our second question of what. i'm going to start with time when. the big idea, advancing policy ideas feasible and scalable which is no small challenge in today's policy context. and what you did with your paper is you look at and trie try to p that each of feasible and scalable to say what of some existing systems, policy systems, mechanism that we could leveraged to better support occupants. the one you focus on was the tax system. talk to us i do think the tax system could be changed or modified to better support these startups and small

microenterprises. >> it's a great foundation of conversation. to start sharing some of the things we learned with this research. i think that the why entrepreneurship, why so them plump and micro-business has been well stated. i not sba put out some research looking at 15 years of the trend of job creation. they found 65-90% of net new job creation came from small businesses before 1995 and -- [inaudible] i think most businesses start as this will provide ships. they started at zero and ago and some of them grow a lot in some of them go not so much by that the point when you're a sole proprietor you are still using the individual tax code. we're talking about income been reported and to purchase on your 1040 like he would wage income.

such as besides that there were i think 23 million people that used schedule c. which is the only mechanism with a 1040 forms, or the schedule c. easy to file their business earnings. about 13 million of those were low income folks. when you think about tax time in the united states, it's probably the largest leverage whoa moment to connect with low income entrepreneurs and into the more context on the tax code is complex for all of us. it is incredibly complex and difficult to navigate when you're every small business. you wanted to see your dream fulfilled for yourself and your family. it's a counterintuitive side, when you look at what's happened at tax time for self-employed and so proprietor businesses, not a lot of excess and. environ is somewhat -- the main

oversight issues, a lot about small businesses that are not filing. so that kind of culture tends to be one of looking at the problems of clients the unfortunate rather than trying to figure out most businesses start a cell proprietorship, and if before they get access credit they need other kinds of assistance, what can we do from the very start to set them up for success, both in terms of the financial -- but also in terms of really understanding the other kinds of assistance. so having said all that really quickly i say that two things to keep in mind. there is going to existing -- that exists in the individual income expo that target low income so complete and micro-business owners. in terms of any kind of incentive. there are things that do exist.

if you make enough to itemize your tax deductions and do it non-imported type of thing you could deduct half of your fica, social security and medicaid. does exist but as we see with most tax incentives, it's not helpful until you're pretty high up the income bracket. when you're a low income person it's not particularly helpful. so talk about the disincentives. i say when you think about what opportunities there are, there's a couple o things but when the first things we talked about that is by one of the biggest -- even though it's leveraging a te tax system and leveraging this idea of refundable tax credit would be a new entrepreneur tax credit. we put this idea out, it's the idea that there would be some refundable credit even for limited by age of your business or limiting the amount. nebraska has a model of this policy that we can build on. that would have the opportunity

to incentivize a lot of folks to do so employment to get over the. i think the other thing is referencing the current tax incentives, refundable tax credits that you help a lot of small business owners. the eitc even though its focus on low-wage workers comp the fact is your self-employment income comes for the. answer but i think in 2007, 6 million individuals who filed a schedule c. actual reported some self-appointed earnings. and a pretty large portion, most of income from self-employment. there's a whole number of programs that come out of the iris that supports volunteer income tax assistance, that support helping individuals to navigate the tax system. right now there's a pie that were a small number of those sites are able to help low income entrepreneurs with their schedules defiling. but limited in both -- is on a

pilot and you get more than 5000 hours worth, they can't assist you. so when thing would be to look more closely at how it could be supportive. we're looking very closely at the pilot and so i think making sure it is refundable for low-income workers are more highly leveraged as a of the opportunity we can talk of other things later. spent that issue at tax time is important it's important from the growth section because what a lot of entrepreneurs will do is when they start putting attacks if they start they minimize income so they can minimize their taxes but not realizing you want to borrow money later they're not showing revenue. some reason, way to help folks be able to go towards that the ability to grow. >> that was one idea. you do more work look at another system which is looking at the workforce system and how we might think about microenterprise in the context of the workforce.

spent this is exciting. it hasn't been published yet. the first new idea for job creation reports was published by the foundation. a new movie coming out in january and was a close of the tax code, committee coach, the workforce. within workforce we talked to experts and think about how do you leverage the systems that exist. workforce is the way. one of the big things we found was the way that the workforce investment act, the primary funding pickle for job training, the performance measures are pretty specific. they measured if you get employed, how long you are employed for and how much you make. if you are trying to fit someone with a business start up with entrepreneurship, none of the ways that you would categorize if that person to successfully employed, match up against the performance metrics that you rely on to get you funding year in and year out. one of the first things to be done would be for the department of labor to figure out, support

some alternative measures that count from the workforce investment system because there's guidance out there to support referring people to self-employment. is a self-identified id and if their qualifications are there, there's guidance from the department of labor that would say that you should refer people but it's just really disincentivize in terms of the performance metrics. that's the most important thing. there's also the self-employment assistance program which is a way if you're receiving unemployment insurance, that rather than having to look for job as a way to count toward a, your state has authorized through a legislative process for self-employed assistance program, you can be working on starting your business and still be receiving your unemployment insurance. that has such relevance right now but the complexity and red tape around leading a state be allowed to do that are leading people trod down those funds is complicated. i think there's a lot more work to be done there.

it's entirely possible and it's outside of what happens inside the beltway entrance of making steps happen. >> i should note, elaine, that in field paper we also -- definitely, i want you to speak to to policy ideas that you raise in your paper. these get more to the state level and the local of the, moving down the spectrum. the first is the committee development lock program is one of the ideas and how that can be used and is being used but could be expanded to support microenterprise development, and the second is, our capital access programs. could you speak to both of the? >> sure. community developed block program funding is available to municipalities and to state municipalities for a broad variety of purposes. the real value is their flexibility. they can be used to support a

variety of tools and mechanisms to support economic development. and in about 26 states have already decided to use some of their funding for microenterprise. out over all, i think maybe about only 9% of all the funds available for economic development are being applied to microenterprise. under 1% of all cdbg funds are t are available are being applied to microenterprise developer. so there's really an opportunity to use those funds to support micro, which has been demonstrated in the few places, but a lot of states have been taken advantage of doing that. and again as i said, the idea here is that those funds can be used by states and localities in a very flexible way. they can be used to support training dollars or technical assistance dollars to deliver systems -- services directly to our to printers. they can be applied to loan funds so that more lending can

be done to business owners. they can actually support the operating expenses of the programs themselves which is often the hardest money to fund income by. so if a state or city is interested in leveraging the power of microenterprise for job creation, they can use that instrument very flexibly to fill in gaps within the local ecosystem in terms of what local programs need. and it's really worth thinking about how that's possible to do. and i just put that out there, think about how some of those resources can be shifted to support more of this job creation at the micro level. capital access programs are programs that enable lenders to mitigate the risk of loans that they make to small businesses. what happens is the state's capital access program creates a reserve fund to which the state,

the lender and the borrower each contribute a portion of the reserve that's required against the specific loan. and then those monies are held in a reserve account, and if there's a default them those monies can be drawn upon to replace those lost funds. so what's the valley here for a micro program? microenterprise programs, first of all, lend to entrepreneurs who would not be linked to by the formal financial system. and so the more loans we can get out to entrepreneurs, the more potential we have for job creation. and actually our research shows that borrowers are more likely to create jobs and non-borrowers, because their businesses were at a point where they ready to grow. getting more money into the hands of michael borrowers can really kick start more job creation. so by creating this reserve funds, it mitigates the risk or all parties but it mitigates the risk to the borrower, to the

lender and it reduces the obligation of the state as well in terms of what funding it might need to support this linking. which allows the program then to amplify what it's doing. in effect for a micro lender it doubles or triples they reserve funds. thereby allowing them to extend much more broadly into the market where there's some risk. right now colorado, north carolina, georgia and california i think are the only states that use the capital access fund for microenterprises. there are 26 or 27 states that have these programs, but they'd confined mostly to the formal financial institution, to banks that lend to small businesses. the four states i mentioned have opened it up to micro lenders which really provides a powerful tool. in the state of california, it has meant opportunity funds in the bay area, valley economic development corporation in los

angeles, axion in san diego and in about lenders in between have all had access to these funds under the capital access program. in 2011 i think 40,000 microphones were able to be made across the whole system because of allowing the access to that program. the losses have been limited. very modest. i think in that year it was under 10%. so by diversifying the risk across all three parties and by allowing lenders to expand their capacity to lend, he could be a really powerful to. >> there is an opportunity because one of the programs that don mentioned, the state small business initiative got money into state capital access programs. so funny that to open it to microenterprise to be helpful. one more set of policy ideas and then we will bring in particularly con and christy, you got a lot of expense with policy ideas worked with him on the ground. i'm going to ask you to speak about you folks specific on this issue of local licensing and how

that affects microenterprises and tell us about the barriers you see and some recommendations you made in your paper about how to deal with them. >> server. state and local governments far too often get i in the way of these micro-businesses. and in the way -- rather than clearing a path for these entrepreneurs to be creative and two brand-new things. the local licensing requirements at the state and city level create these small boxes that microentrepreneurs often have to fit in two, and they create all sorts of barriers for people. so, for example, the problems created by these kinds of licensing requirements are listed in my paper. they include unnecessary training requirements. so in illinois, for example, a nail technician has to go to school for hours and even take

continuing legal education requirements afterward. raters all over the country are required to go to hundreds of hours of schooling to learn all about hairstyling and hair coloring and curling, things that they don't ever use. another problem, unnecessary facilities requirements. so these laws which are written to codify a very specific notion of what a business should be like, and importantly, these laws which are heavily influenced by the businesses already in existence, make permanent the business model of the businesses that are in existence who don't want the competition, so those laws require certain kinds of facilities which are a waste of money. when we want these entrepreneurs to spend money on new staff, we are asking them to spend money on facilities. last example, funeral homes or

anyone involved in the funeral business around the country might be required to have a full funeral home with embalming rooms and everything. we represented the institute for justice some monks and a monster who simply wanted to build a wooden casket that weren't about to because they didn't have a full on funeral home with a funeral licensed funeral director. thirdly, these laws create his very narrow categories that people have to fit into. uber is a fantastic example of a brand-new business that using technology to improve transportation, but it's running into these problems in every city it enters because they are very rigid definitions of what a business can be. what is a taxicab business, what is a delivery or black our business? uber's brand-new idea blurs the

line between those categories and, therefore, some cities prohibit uber from operating altogether, which is a great loss to the cities, and a great demonstration of how such an influence of the businesses on these laws when uber comes in and challenges the laws that define what a taxicab is and what a black car is, it's a taxicab companies and the delivery companies who have long held sway in the city councils provide uber back and make it impossible for uber to bring something new to the city's customers. that brings me to the last category of unnecessary, inappropriate and really damaging licensing regulations, which are purely anti-competitive. in the kind of cap on the number of businesses that allowed, a cap on the number of taxi cabs or a requirement, like i

mentioned, for food trucks, that they be far away from their competitors, is simply preventing entrepreneurs from doing what entrepreneurs do best, innovating, bringing new ideas in the economy, challenge the folks are already out there and to bring new and exciting services to the customers, but also new and exciting jobs for their neighbors. >> so thank you, beth. one of the things you point out which we didn't get to in the macro question is the issue that's worth recognizing which is the whole issue of independent work and self-employment, what we see as a growing labor market trend. that's another reason to think about these policies. there are positives as those negatives, the fact that the growing trend. we did do a whole form on that and maybe someday. to some extent it's going to be a labor market trend that's going to be with us figure out how to respond to the. let's get into the real question

which is how do we move these ideas forward. i've got my two commenters on the end, thank you for being patient. we're going to keep you up now. christie, i'm going to start with you. you been working on a bunch of -- with the national league of cities. the local ones. i want to start asking sort of a big picture question which is, if you think about what's going on in cities right now, where on their list is the issue of job creation as an important issue? when you think about job creation do they think about micro-businesses? >> that's a great question, and the answer is yes. job creation is still right up there. we've done a number of different types of surveys and interviews with city officials from across the country. thinking about things like service provision, finances and job creation sort of the big three we are seeing are sure. i think tradition when we think about job creation, economic

development and cities in terms of the policies they employ to get there, we typically think about economic attraction which is how do cities attract bigger businesses and companies to their communities. we know to our survey work that that's still an important component of the strategies that cities are employing. they are thinking of economic attraction in different ways which again could be a whole separate forum. but i think a more strategic ways. but they're also looking towards a much more balanced economic development approach which includes small business and micro-enterprise development. we know that looking to 2013 and 2014 cities across the country really are looking to up the amount of investment they're making in those programs in their communities. specifically, i think it's interesting when we think about small business development and micro-enterprise development by and large it's just later business development, how do you make your committee more business friendly in the sense

that we're not looking at tax policy specifically. we are not looking at again how to attract larger businesses but how do you make the local government itself more friendly to the incompatibl incompatiblem during the businesses that potentially can be in the community, growing from within the community and religious want to be in the community and potentially again i think microenterprise we talked about as being the type of businesses that create the quality of life in the community but there are other enterprises that have different growth aspirations looking towards this could be the next larger business. there's lots of reasons why local governments certainly are looking to a more balanced economic development approach. when their think about what small business development means, for their community, it really is how do you increase communication with these businesses and particularly when we talk about microenterprises, that maybe and lower income

neighborhoods or may potentially think about immigrant communities as well. how do you create services, create those services and then promote and communicate those services and a way that's linguistically and culturally relevant to these committees as well. >> one of the issues you been working on at national to get cities is the issue best races which is how the business licensing regulations get in the way and how do they constrain microenterprises? you been doing with the issue of food trucks. and you talk about the work you've been doing and maybe give us ideas of places, of cities where there's a lot of interesting work going on and you're making progress and maybe what some of the challenges have been? >> sure. i think you raise a lot of interesting points and i would agree with most of those. when we think about licensing, particularly at the city levels and permits, there's always a reason why a particular permit or license was there to begin with but over time as we said,

unless you actually taken in the door, take stock, think about why those licenses and permits are there to begin with, it just kind of keeps getting layered on, layered on, layered on into the actual impact is its stymieing job creation in the community. there are lots of places obviously that i've been experiencing growth in food trucks more recently. so it's an emerging industry that is growing more quickly than city regulations and licensing and permits can keep up with. but it's also an area of the economy that many cities see as holding a lot of promise for entrepreneurship, particularly for microenterprises. so what we are seeing at the city level is that communities are dealing with issues related to public health, public safety, all these other critical factors. how they regulate public space but really looking at licensing and permitting a sort of the key

impediment to helping support these businesses. so how do cities take an inventory a gym of what licenses and permits they have in place, what are the impacts of those, and what we found by and large is that even though cities that have been proactive in terms of taking inventory of what those licenses and permits are, they're still about three to five permits that are required. and this is a sort of the positive scale. 35 permits, three to five departments that need to be visited by the business themselves. some of that may not necessarily be able to be decreased beyond that three to five permits or three to five departments that need to be visited. we know that cities are looking at the cost of the permits as well. and you take place like boston, for example, which probably is well-known to many as supporting

the food truck industry. they have a very comprehensive website for example, that really lists and specifies all the information that anyone is interested in starting a food truck really needs to know. printable forms, easy access to information. and again, they found that's helped. in cincinnati, for example, i was a public health is always going to be the key when it comes to food trucks in terms of regulations and permits, most concerned with. so they've created one stop shop for food trucks through the public health department. these are various ways that cities would are looking to supporting the food trucks in their community. >> sound good, bad? >> some. we're making some progress but i'm going to jump to kanye and i'm going to come back and talk with christie. connie, one of the things you've

worked on in the past is the issue of the workforce investment act and trying to do with the issue that ida services. talk to us about how that went and what you see as the continuing issues. >> certainly. i think part of what we've tried to do, working with our state associations across the country is to really get the state level workforce investment boards to understand the value of micro-businesses and its role in job creation. as you've already heard, the barriers are in the actual policy in terms of how organizations are allowed to certify a placement, what they call a placement. so they can be funded. and so we have actually run some of our members have created these highly sites throughout

the country -- highlight sites, workforce investment funds. so we asked have been able to give, provide alternatives of what could be used. i think the problem has come down the department of labor often times doesn't recognize entrepreneurship as job creation. business development. they have actually said to me, that's not creating. that's not the same as strength job when you create a business. so we have a real disconnect in terms of what job creation really is, how it's formulated. and that these businesses when you start a business, yes, you have created a job. and so we are continuing to work to try to get changes, written changes, if we ever get a

reauthorized because it still hasn't been. we have legislators who are ready to add new language towards that bill. so that they could change automatically in the regulation. in 2010, we were instrumental in getting the administrator for the entrepreneurship training component at department of labor issued a guidance letter to all the state organizations, all the workforce investment boards around the country, actually telling them in writing that it was okay to use entrepreneurship training, that they actually should encourage the wares at the local level to do so. and that still didn't happen. we believe that not only will we just need to mobilize more individuals, more institutions,

just mobilize in terms of making a stronger case, to make this change happen. and we probably need to necessarily get the regulation changed. we think there are all kinds of opportunities through pilots to keep doing it, but if we want scalable permanent change, we really have to focus on the federal legislation, and urge reauthorization and passage of the some of the amendments that have been actually authorized and presented for this bill spent we're getting a look at caught up in this problem we have in washington, which is not much is moving although we're starting to generate energy. spin we vetted energy. we've had new legislators are displayed in an come on board. so it's gaining interest, it still, we have the other kind of broader issue on the hill in terms of actually getting that reauthorization. but it is gaining more acceptance. i think there's more work

actually to do. i think that legislation will happen before we get labor department to address 21st century kind of rules that really support, you know, what labor looks like now. we don't have necessarily the world we need. we don't have rules and the laws to support, protect, or even count jobs in this country. some of the work created by microbusiness owners isn't even counted as a job. so there's a whole trajectory of activity that needs to take place in terms of convincing the department of labor that it needs to modernize and create more rational framework for today's 21st century workers, including those who are self-employed and owners. spent thank you. i'm going to go back to the state and local.

we talk about cdbg which, of course, is a federally authorized funding program that is a decision, talk about how to allocate that money. so christie, this is pashtun cdbg is a program near and dear to the hearts of local officials. can you talk a little bit about what you see as the opportunities and maybe the issues there in terms of mobilizing -- elaine talked about how it's a small about of those resources that go to microenterprise develop and. can you talk about what some opportunities and challenges might be? >> sure. we know with the downturn, cities really were to justify the use of cdbg funding for job creation and economic development purposes, particularly for supporting small businesses in struggling neighborhoods. that gets to the heart of the reason why we have cdbg in this country. particularly as elaine mentioned, seed funding to cdfi,

well instructed alone, business owners, like improvements will help to increase the quality of life in communities and supporting small businesses. and begins a lot of times, again microenterprise to the extent that it's a direct goal for the local government within the economic development, cdbg has been an excellent tool. so thinking about challenges, there's always a threat to cdbg funding to local communities. it's particularly an environment of increasing the amount of competitive grants to cities versus these flexible funding through formulas like cdbg. so all cities about 50,000 in population receive cdbg funding regardless of me. and i think that in and of itself is sort of, puts a challenge of local governments to really make the case for why cdbg funding is so critical to their communities. so although this flexibility is

fantastic in getting the funding directly to local communities is really what we want at the league of cities of course and cities are looking for. that flexibility in and of itself also chris challenges thinking of cdbg funding go forward because there's a lot of -- in terms of thinking about the types of programs, they are extremely broad. again, ranging from economic develop and neighborhood development, various types of programs that are allowable under this program make it difficult to collect the data that says there to measure the performance and the impact of the funding and programs in the committee. so again i think that kid gets a particular challenge for justifying the continuation of cdbg funding to local communities. on the flipside of that, i think there are ways that cities can think about cdbg funding and

being able to measure the performance and impact of those funds. i think it's going to be sort of a critical component going forward. .. >> through the use of the specific program that they're partnering with the aspen institute to implement that allows them to collect the data and the performance and have

that contact with the microenterprises to be able to assess the impact that the program and the funding itself is making in the community. >> and part of that's understanding what it costs to create those jobs since that's a clear guideline within cdbg, one of the ways they get measured. >> absolutely. and in that program in seattle, it was a story in 2010 with a one-time $250,000 program through cdbg and then continuing $75,000 in 2011 and 2012. >> uh-huh. and, connie, you mentioned that -- connie used to run a microenterprise program this chicago that you got 20 years of cdbg funding that was a core of your work. >> it was very important. we weren't the only organization to have it, but it really did go to support microbusiness development, and the organization kept it for its 20 years in existence. >> so the importance of that flexibility as elaine mentioned, something you can rely on at the local level if you can make that case.

so, connie, i wanted to come back to you and talk a little bit about advocacy at the federal level, you also support these microassociations, and just thinking more broadly when you think about trying to leverage these different policy systems and ideas, how much of the problem is the specifics around the oil and how much is just this greater lack of understanding and really thinking about what the role of microhis is? >> it's an excellent question. i really think it's the latter. it's the hack of understanding. it really is finish the lack of understanding. it's the reason we've invested so much time and talent and resources into the research. the research that aspen does is important because it digs into what the organizations are doing. but what we need to understand on a larger scale, again, since 92% of these businesses are micro in the country, we just need to increase the understanding of microbusiness. and so what we've found talking to states this particular is --

in particular is that once they understand these businesses and who you're talking about and they recognize that, oh, that's, you know, my brother has a micro business, they never thought of that before. they begin to pay attention. they begin to understand that one size does not fit all because they believe right now that they really are, as you talked about, they really are providing policies and programs to support small business. the rob is they don't reck -- the problem is they don't recognize the nuance across the small businesses. and so there are many policies as we heard that really interfere and are barriers to microbusinesses because of their particular size. we've found, for example, this oregon when -- in oregon when we are working with our state microbusiness association and the governor's first lady of oregon has the ram where she's

actually -- has the program where she's actually incorporated microbusiness as part of their prosperity program. it is a program focused on alleviation only because of the understanding that she gained by actually looking at kiva. and so once government or an individual in government develops a better understanding, once they have data, we've found that there is more willingness to actually start working and thinking about the types of programs that can help. we see in chicago, for example, that there is a city program that has begun to put more emphasis on microbusiness and trying to expand hydrobusiness and microlending. we've been asked by other cities to help them understand new ways of thinking about what they can do around microbusiness. so we think just having the

understanding. one of my faith mayors in the -- favorite mayors in the country, i use his quote all the time. i won't say which one it is, but you may recognize this. this is not local. he said in god we trust, everybody else bring data. [laughter] and so i think it's the case. we have to continuously bring the data so that we get a better understanding and the characteristics of these businesses. in the report i mentioned earlier, bigger than you think, we've actually been able to create a typology that describes five different types of business openers of microbusiness. and we -- business owners of microbusiness. and we think based on their type of self-employment, their characteristics of income and revenues and other, we are beginning to understand a lot more about these businesses and their unique challenges and needs and what it will take for them to succeed. we also note that even the

secretary of the treasury here has talked about and has said 8,000 bank loans are declined every day in this country to small business owners. and so if we want to change that, we really do have to look at capital access programs and the kinds of challenges to use those programs whether they're banks or cdfis. there are capacity issues, a number of issues that are preventing these things from being useful. but we have to create better understanding across the board of the businesses and the hurdles related to them being able to be successful. >> great, thank you. um, do you mind if i open up for questions? i was going to tee up one more question to ida, but we had a great conversation. so i want to take a bit of time to open up for, see if we have questions in the world, and if not, i'll come back and ask my question. if folks have a question, if you could raise your hand, we will bring you a microphone, and we would ask that you identify

yourself and your organization and also, um, since we just have a few minutes for questions if you can be brief with your comment or your question. do we have anyone? yes, great. >> [inaudible] >> hang on a sec, we'll bring you a mic. great. >> you talked about cdfis and other institutions making loans to microenterprises. are traditional banks doing it? and if not, why not? >> connie, you want to take that one? >> again, i just said 8,000 loans are declined a day. we think the real reason is the high cost of lending. whether it's a bank or the cdfis, their costs are unnecessarily too high. and so a lot of activity is going toward bringing down those costs whether it's using technology, looking at different kinds of underwriting that bypasses fico scores and brings in more social, using social media and social demographic data.

because a lot of things around big data and technology can really begin to change the business model and the underwriting model used by banks and cdfis to lower the costs. most banks will not make a loan nowadays under $250,000. and so one of the things that aeo is doing is putting -- we've formed a microcapital task force actually out of the works in a forum that don graves and the secretary have created. they created that forum bringing in fin-tech companies, financial and technology companies, and aeo is moving with that and creating a task force that looks at policy changes that are needed and regulatory changes that could be implemented to create a real financial market for sub-$250,000 loans. >> did you want to add to that?

>> yeah, just a couple of things. a number of years ago we at the aspen institute did a study trying to understand the market for high crow loans, and -- micro loans, and at that point we found banks were going downstream, downstream, downstream, reaching smaller and smaller business owners all the time. this was pre-2008, of course, right? and they were using tools of the credit card and enhancements to credit scoring to do that. then 2008 happened, and all of a sudden aware of the risks, banks pulled way back up market. so what's changed a lot in the last five years is that banks have pulled out of a market they were entering at one point. and and part of that's because they must be more conservative in the underwriting that they're doing. leaving that market open and available and underserved. and so that's come into play. so the other thing and just to follow on cobbny's comment --

connie's comment, the average loan of a micro loan that we track across the country last year was about $15,000. so you compare that to a minimum loan that a bank might be willing to look at, that's many times the multiple of that. so how do we get those 7,000, 15,000, $10,000 loans out there easily to enhance business growth? >> right. and i guess the other thing i would mention is that connie talked about the 8,000 folks who get turned down every day? >> every day. >> every day. there's also we know many people who never walk into a bank in the first place because they know they don't have established credit, or their credit's poor, they know they're not going to get a bank loan, so there's also the question of who serves that market which is where the microenterprise and other organizations are looking to move but aren't banks. other questions? we've got one here. >> hi there. >> if you could tell us who you are and your organization, that would be great. >> i'm -- [inaudible] and i work for super justice. we've been talking about different rams through the government and just through

different things that would try to help microenterprises grow. has there been any work to try to organize wealthy individuals who would rather invest on their own? a $50,000 loan probably is more possible for a million their than a -- millionaire than a bank, individual investors who are maybe big in business already to try to invest in microenterprises instead? >> connie, do you want to take that? go ahead and then elaine. go ahead. >> quickly, there are a number of programs, you heard don talk about cloud funding. so there's kiva and some other programs like that. and then you have the cabot foundation that has notes that any individual -- i think there's a limit to them, but individuals can invest with that foundation, for example, and those funds would be with invested in a cdfi. so trillian, other entities like that. so those are two kinds of

examples. one is an individual organization that has a strategy such as kiva where they're doing that, and the other is an investor type of strategy that tries to mobilize those funds. >> i think one thing i'd add on that we didn't really talk about here, there is one kind of asset-building program in the country, and one of the things you can do match savings for is business start-up. and then without that federal funding, you need to raise additional match to that. a lot of the ida programs around the country do raise dollars from individuals to help match those savings. >> there are also groups, less institutionalized groups, angel investors who do look at a wide range of applicants, and, you know, i've even heard that there are rich folks who just hang out on kick starter and, you know, make generous anonymous donations to start-ups. >> right. and so i do think that the crowd funding regulations are going to be interesting and important.

one of the questions we have is which entrepreneurs are going to get funded, so there may need to be mechanisms that are built to really allow some of the lower income entrepreneurs to take advantage of that, but there's certainly, i think, an opportunity there. >> and if you care about this issue, you really should weigh in on the regs because it could really go against what we've been trying to work for. >> uh-huh. was there a question in the back? yes, great. >> hi. my name is teresa, and my question is what efforts are there that either exist or should be made to include the disability community and those with disabilities into the microenterprise development as well as entrepreneurial skills and other assets that may not be given directly to them or is more accessible for them? so if anyone -- i don't know which one would be more -- >> it's a great question because it's one of the target populations of the field. elaine, do you want to talk a little bit about that and is maybe some others? >> i think historically about 5% of micro-entrepreneurs supported by programs are seem with

disabilities. at least i've seen that across the years in different data sets that we've had. there is an organization called the abilities fund that has worked closely with microenterprise programs in different locations around the u.s. to try to help those programs understand what barriers they may be unintentionally putting in the way of working with people with disabilities and helping them revisit their policies, procedures, accessibility standards, etc., etc. so i know that different programs across the u.s. have been more sensitive to that than others, but there are models and mechanisms to make that happen. and it's certainly a target population that the field has been interested in and, connie, i know over the years at least in the past aeo did education around how to open the doors and reduce barriers to people with disabilities in different ways through a variety of technical assistance offerings.

so there has been some efforts. there probably could be many more initiatives of that type. but i think the field has understood that that's an important constituency. >> i would just agree that there's a huge opportunity for more. i think one issue that we face is a lack of awareness of the programs. aeo along with citi gave an award at our last conference -- this year, 2013, of hearing impaired organization -- a business that's a hearing-impaired organization training entrepreneurs. so i think trying to get more recognitioning and opportunity -- recognition and opportunity to increase replications is huge and one of the things that we're trying to do is help to poet that particular -- promote that particular model but raise the visibi o